Oil tumbled on NOPEC headlines, gold shines

Oil slides on NOPEC, Iran talks

Crude prices tumbled after a couple of headlines had energy traders scratching their heads.  Initially, crude’s weakness was attributed to the news that the US House committee cleared a bill that opens OPEC to antitrust suits over production cuts.  This is not the first time Congress has introduced measures to take aim at OPEC, but this NOPEC bill should struggle to get approval from both chambers.  The US shale industry will likely tell their lobbyist to make sure this bill doesn’t get approved.  This rabbit hole of arguing OPEC collusion in driving oil prices higher has been avoided for over the last two decades and might do more harm than good for US oil companies.

Supporting the move lower for oil prices was fresh optimism from Iranian president Rouhani that a deal could be reached soon.  Rouhani noted that nuclear talks are 60-70% complete.  The restoration of the 2015 nuclear deal would lead to an eventually easing of sanctions, which will allow for more Iranian crude to come to the market.

With risk aversion firmly in place today and possibly for the rest of the week, WTI crude was ripe for weakness.  The US stock market has run out of juice to keep making fresh record highs and that bearish sentiment could be a steady drag on oil prices for the rest of the trading week.  The outlook for crude prices is still very bullish for the second half of the year, so WTI could see short-term weakness target the lows set at the end of last month (~USD57 area).


Gold’s best friend is falling Treasury yields and the two might be inseparable a while longer if a falling stock market keeps driving safe-haven flows.  Gold is having a modest rise despite a stronger dollar.  Rising global COVID cases, the inability for stocks to keep making fresh record highs has Wall Street turning negative over the short-term.

Bullish gold momentum could grow here now that ETF selling has ended.  If over the next couple of weeks gold ETF purchases increase, much of the street will probably turn very bullish on bullion.

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Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya